IMF: Weak out look for Caribbean economies

The governments of caribbean nations need to act decisively to reduce on the high public debt (which amounts to 9 percent of GDP) and to deal with “persistent” weakness in the financial sector. However, the report also indicated that countries such as Jamaica, Antigua and Barbuda, and St. Kitts and Nevis have moved to reduce their public debt.

This was the recommendation of the International Monetary Fund (IMF). Economic recovery in the caribbean remains weak as the individual member states continue to struggle to recover from the protracted recession.

A further decline in advanced economies of the west will erode gains made in regional recovery and add pressure to an already heavy public sector burden.

“Fiscal consolidation efforts should, to the extent possible, preserve growth and competitiveness by avoiding cuts in infrastructure spending,” the IMF’s Regional Economic Outlook launched on Thursday stated.

“Tourism-intensive economies are projected to expand by an average of 1 ¼ percent during 2011–2012, almost 1 per cent lower than anticipated six months ago. For Haiti, growth is estimated to reach about 6 percent this year, well below the 8 percent projected back in April, as earthquake reconstruction efforts have been lagging.”

In the Eastern Caribbean Currency Union (ECCU), financial sector health indicators have continued to deteriorate. Governments need to diagnoze the health of the financial system quickly and develop options for strengthening balance sheets, and avoid further compromising public finances.